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to we will provide additional support. if financial conditions involved in a way that is inconsistent with economic recovery, we will provide support. in that way we hope to increase confidence both among market participants, but also among investors and private consumers and other people in the economy. so again, i mean, your point is well taken that we are in a position where this simple adjustment by 25 basis points in the federal fund rate seems like a long ago experience. we are in a more complex type of situation, but we are determined to be as clear as we can. we hope that you and your listeners and the markets will all be able to follow what we're saying. >> donna and then we will go to peter. >> donna with american banker. next month will be the 3-year anniversary of the dodd-frank act.
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as you know, there are number of significant all makings' that have left. provincial regulations. and risk retention to name a few. can you providen where we stand with bill greuel makings and also, are you still optimistic that we will see these rules completed by the end of this year? >> it is certainly true that it has taken time to do these regulations. there are number of reasons for that. the first is that there are inherently quite complicated. the volker rule for example involves some very subtle distinctions between hedging and market-making in proprietary trading. the second reason is that many of them involve multiple agencies which have to coordinate, corporate, and agreed on language. i think six agencies are involved in making that rule. and the third fact, the third and basic issue is that we really have to do our homework and get these right. that means having extended
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comment on france committed and lots of of permission from the public. then we reviewed those comments and do all we can to make sure that we are responsive to those many, many concerns and suggestions. so it does take time. i think it is a little unfair to say only 30 percent of the rules have been completed because most of the rules, even if they have not been completed are not very far advanced which is true for major rules to be very close, for example, to completing basel three. we have made a good bit of progress on the volker rule, and i do anticipate that being done this rule -- year. we are making additional progress on 165-166 advisory roles in the capital surcharges. these are all things that will becoming relatively soon, at least during current year.@ and, of course, once they are out there then it will still take some time to be implemented for financial institutions to
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change their practices and so on . also emphasized that even as this is going on we are not ignoring the health and safety of the banking system, for example. since 2009 we have been doing these very rigorous stress tests, which are part of the dodd-frank rules. and the amount of capital that u.s. banks hold has roughly doubled the largest banks since 2009. and, indeed, the largest banks now appear, most of them, either to be possibly comply or pretty close. so we are working with the banks to ensure their safety and help them move in the directions that they know they're going to have to be going, even as the rules themselves are being finalized. so it is an ongoing process, but i expect to see more rapid completion, you know, going for it in the next few quarters. >> peter and then we will go the
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keys. >> peter barnes, a fox business. sir, one of the highlights of the kansas city conference in jackson hole every year our remarks by the chairman, you. you're not going this year. we have heard it is because you have a conflict in your personal schedule. but some have taken that as a sign that you may not be staying on the job for another term. could you comment on that? and could your office give us a little more explanation as to why you're not going to be in jackson hole for the first time? >> as i said, i will not comment on my personal plans, but i will say this, there is a perception that the jackson hole conference is a federal reserve system wide conference. it is not. as a conference sponsored by one of the 12 reserve banks. every one of the 12 reserve banks as conferences, meetings, and this is the one i have gone to the most poorly of any reserve bank and as i think it is not an appropriate to go to a different conference in different meeting and to the
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essentially meet all the constituents that i have in these different reserve banks. so that is one reason certainly. >> steve beckman. mr. chairman, number of your colleagues, as reflected in the news set projections, expect the unemployment rate to get down to six and a half% next year, which is your threshold for considering raising the funds rate. and yet the fomc has also said that it expects to keep rates very accommodative, considerable time after asset purchases and after the recovery has strengthened. yet here we are, the middle of 2013, you have not even begun to scale back asset purchases. so -- i mean, you partially addressed this, but could there be a conflict between, on the
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one hand, the asset purchase program and on the other hand the funds rate guidance policy. could they conflict? did you, perhaps, elaborate? >> as early of the unemployed rate comes down so fast that this becomes a problem. i guess i would point out a couple of things. one is that, of course, you know, there is a range of estimates, and they are all based on each individual's idea of optimal policy. so the policy assumptions may not be the same. so it is true that some are as low as six and a half, but as i said in my earlier answer, that is a threshold, not triggered. so evidently if you look at the policy expectations that are given in the dot diagram, you will see that the very strong majority of fomc participants still expect rates to be quite low at the end of 2015. as to save people looking at a variety of factors, including
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inflation which is predicted to be quite low. other, perhaps, labour market factors and thinking about when it will be appropriate to start increasing rates. >> okay. >> thank you. cnn. first of all, i should tell you that your analogy to landing the economy on an aircraft carrier worried me a little bit. [laughter] from personal experience i find that it is always a little bit jarring to land on an aircraft carrier. i wanted to talk about mortgage-backed securities. you mentioned during your comments here that, if i understood correctly, you are not going to dispose of the mortgage-backed security, so you have on the buck during this time of normalization. i have heard many people on wall street and elsewhere say that right now the federal reserve is the market for mortgage-backed securities. and so, which means that it is
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kind of award to market right now, and i am just wondering, how focused are you on mortgage-backed securities and this larger world market, which what used to be a world market for mortgage-backed securities. and i guess what i am saying is, has the ground shifted from under us? in terms of the mortgage-backed security world on a permanent basis or at least for a very long term basis because of that devastating nature of what happened a few years ago? >> well, we are still only a fraction of that total holdings of mortgage-backed securities, but more relevance, as part of our assessment of ongoing assessment of the potential costs of our various asset purchase programs, we pay very close attention to market functioning. our assessment is that the market is still quite healthy market in terms of the spreads
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command terms of execution times, in terms of the number of @%ople on both sides of the market, you know, there are reits that are building up portfolios. there are plenty of real money investors holding in bs. so if the market was really breaking down in some way that would be a factor we would have to take into account, but our assessment -- and of course we're in that market quite a bit so we have a lot of affirmation about it. our assessment is that the market is still working quite well and that our purchases are not disrupting the normal price discovery and liquidity functions of that market. i think that the events of five years ago obviously do have a big long-term effect. there are bills in congress that would change, reform the gst, for example, and ultimately would change the market for mortgage-backed securities, perhaps increasing the amouut of
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private placements or changing the whole institutional structure of that market. we may end up holding some securities which are, in some sense, a leftover from the previous era at some point, but nevertheless, you know, for the time being they are the mortgage-backed securities market, fannie and freddie are basically it. and we are, of course, legally allowed to buy and on those securities. so we have found it useful to do that and believe it is a contributing to lower mortgage rates and a stronger housing market. so that has been our rationale. just again to come back to your question, we do not see any significant deterioration in market functioning. if this thing's a you could point to two, we would be obviously very interested. >> in terms of the government backing to the gst is of mortgage-backed securities, is there concern, a legitimate
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concern that without government backing of this market in some way, that because the private market seems to move with much more rapidity then government backing and government purchases , that, moving the government out of this backup role on mortgage-backed securities would be a real problem or really change the nature of getting a mortgage in america. some people say it is -- the government was not behind it would be the end of the 30-year mortgage as we know it. >> well, these issues are being debated. there are a number of bills in congress which changed the gst, eliminate them in some cases, would place them with backstop government support. as opposed to 100 percent government credit guarantees. so these are the debates that we are all having about the future of the u.s. mortgage market. i think it is inherently
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possible that if there is major change in the government's role in the mortgage market, we might see a different structure in mortgages. you know, other countries have different structures and have, in many cases, the same or similar home ownership rates as we do. so it is possible that we may find that a different structure is better for some people. >> we will go to fred and then ryan. >> thank you, mr. chairman. market watch. i was wondering if you could go back over what you said about the plans for tapering later this year. why isn't tapering tightening? it seems that many people in the market's just, as soon as you talked tapir, they just kind of push ford when they think the first rate hike will come. thank you. >> well, as i try to explain in my opening remarks, or plants
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depend upon the economic scenario and how it evolves. what i tried to do is explain how our asset purchases would evolve if sort of the most likely forecast were to take place which, of course, it won't exactly take place. something else will not happen. again, our basic forecast is one that basically, as was pointed out earlier, the moderately optimistic forecast where growth picks up as we passed through this fiscal restraint, unemployment continues to fall at a gradual pace as it has been since last september. we have made some progress. and inflation rises slowly toward 2%. those are the conditions that define this sort of baseline forecast. in that case as i described it we would expect probably to slow or moderate purchases sometime later this year and then through the middle of the early part of
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next year ending in that scenario summer in the middle of the year. again, it's very important to understand that that -- if we do that that would basically say that, you know, we have had a relatively decent economic outcome in terms of sustained improvement in growth and unemployment. if things are worse it would do more. things are better we will do less. i think i would -- to answer your other question, i would draw the analogy, if the federal reserve, in normal times to lower the federal funds rate by 25 basis points but some traders think that we are expecting 50 basis points, there might be a sense that the financial conditions have tightened somewhat, but nevertheless i think you would say that the fed cut the funds rate by 25 basis points, that that was an easing of policy. by the same token, as long as we are buying assets, we're adding holdings. we do believe, although there is room for debate, we do believe that the primary effect of our
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purchases is through the stock that we hold because that stock has been withdrawn from markets, and the prices of those assets have to adjust to balance supply and demand, and we have taken out some of the supply, prices go up in yield goes down. so that seems to be consistent with the idea that we are still adding liquidity, still adding accommodation to the system. >> brian and then we will go to kevin. >> ryan said the economist. mr. chairman, i am trying to sort of understand that you with relation to these inflation figures. i'm a little surprised at how i guess blase the committee seems about them with the exception of president ballard. inflation looks remarkably low on board -- both corn headline, pc and cpi. your projections that it rising to at most 2% in 2015.
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you say that inflation expectations have remained sort of within the range that the fed is traditionally comfortable with, but they have fallen by a good half a percentage point. as you know, when interest rates are stuck at zero lower bound a defined in the inflation expectation translates into an increase in real rates. why is the fed not more concerned about this? seems to me that earlier in the recovery there were more concerned about declines in inflation like this. wouldn't you say that to even if you're happy with the pace of labor market recovery that other things, this sort of inflation performance, you should be pushing harder on the salary. >> i don't disagree with anything he said. i think low inflation is a it increases the risk of deflation. it raises real interest rates. means that debt deal averaging takes place more slowly. now, there is always an issue about, you know, why is a low. and as i . out, there are a few reasons that are probably not
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that meaningful economically. for a sample, the temporary movement in medical prices, the temperance movements in on market prices, things of that sort. after all, the cpi is somewhat higher. so we expect the inflation to come back up. that's a forecast. but i think it's entirely wrong to say we are not concerned about it. we are concerned about it. you would like to get inflation up to our target. and that will be a factor in our thinking about the thresholds. we will be a factor in our thinking about asset purchases, and, you know, we have to do a mandate. it is price stability, and they're is a reason why we define price stability as a positive inflation rate, not zero, because we believe that in order to best maximize the mandate we need to have enough inflation so that there is, in fact, you know, some room for real interest rates to move. so i don't disagree with your basic argument.
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>> kevin. >> thank you. since he referred, is see the real power behind the throne? the questions we all have. you had mentioned on several occasions now that quantitative easing is designed to kind a spurt -- drive down the yield enforce more risk-taking. there had been debate a couple of years ago at the beginning of this about inflating the not too tough commodity prices. inflation has always do, but oil prices are anchored somewhere around $99. we were told was we had domestic production, record production now, that would be a signal to bring prices down. has not happened. brazil has people in the streets because of inflation. what degree do you think quantitative easing is actually inflating commodity prices and have you been able to filter that out? check any thoughts on wage
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growth and white that has been so flat and everything else seems to be doing good and the economy? >> well, as i recall, i believe i had this right, when we introduced the second round of qe2 in november 2010, there was a lot of increase in commodity prices at that time. and there was a lot of complaining that the fed is pudity prices and that is a negative for people around the world. and we argued at the time that the effects of the federal reserve policy on global commodity prices was probably pretty small and that it operates to the extent to did have an effect mostty through growth expectations. that is, a stronger global economy tends to drive a commodity prices. this time around we purchased and are in the process of purchasing a lot more than we did in the so-called qe2. we have not really seen much
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increase in commodity prices. commodity prices are way off peaks of early last year. oil is a little bit different from others in that it kind of hung out. many other commodity prices have fallen further, and the reason i would give for that is that the emerging markets, china, the rest of asia, and some other parts of the world, plus europe, of course, are softer. and so global commodity is weaker which explains, i think, the bulk of what commodity prices have not risen so much. i think that is all consistent with our story that the effect of flag asset purchases and commodity prices, not saying it's zero, but i don't think that it is nearly as big as some folks has suggested. in terms of wages, i think that is mostly consistent with our view that unemployment at over seven and a half% is still pretty far from where we should
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be satisfied. maximum employment, we think is, again, between five and 6%, these are very difficult numbers to estimate. so very weak wage growth except in a few places and a few narrow occupations, indicative to me of the labor market that remains quite flat and where, you know, that justifies, i think, together with low inflation, justifies what we are maintaining highly accommodative policy. >> kate and then -- >> mr. chairman, k davidson from politico. the ftc money market fund proposal is a comprehensive -- less comprehensive than the plan that even the financial stability oversight council endorsed. do you think that they shoull defer to the fcc or still press for more to be done? >> well, i am glad to speak to the fcc taking of money market reform. this is, by far, the best
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outcome for the fcc to do it. is the area where they have the expertise and where they had the experience. in terms of their actual proposal that they put out, of course it is just a proposal for comment. one of their two proposals, the floating in a the, the flooding net asset value is, of course, qualitatively similar to one of the proposals that was in the f sock suggestions. we have not yet reviewed this in enough detail to give a few. but i hope that -- i know for sure that by putting out of floating in a the proposal they're moving in the right direction. i am hopeful that what comes out will be something that is sufficient to meet the very important need of stabilizing the money market fund.
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>> thank you, chairman. we have seen the japanese market some say this is due to uncertainty for monetary policy deduction, but others say this is due to lack of confidence to the bank of japan monetary policy. so how do you the bank of japan's efforts? do you still support the bank of japan policy? another question, how much do you pay attention to the international market when you consider the strategy? >> well, i think the volatility is mostly linked to the bank of japan's efforts. it would seem logical sense in earlier episodes when the fed was doing asset purchases and
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the doj was not doing anything, there was no volatility. so sort of seems logical that the change here is the change and doj policy. doj is fighting against a very difficult entranced deflation. of course, deflationary has been the problem with japan for many, many years, which means that expectations are very much to the public expectations are for continuing deflationary and therefore it takes very aggressive policies to break those expectations and to get inflation up to the 2% target that the bank of japan has said. that is why it's difficult. have had to be very aggressive. that aggressiveness in the early stages of this process where investors are still learning about the deal is a reaction function. it is not all that surprising that there is volatility. also, did kgb markets are less liquid than domestic and the treasury market, for example. you know, i think it's something many to pay close attention to, but on the whole i think that it
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is important for japan to attack deflationary. i also agree with the three arrows, the idea that this size breaking deflationary is important to address the fiscal and structural issues as well. i am supportive of my colleague and what japan is doing even though it does have some affect on our economy as well. there are a lot of reasons why emerging markets and other countries experience capital inflows and volatility. some of them have to deal with changes in growth expectations. for example, we see a lot of changes and growth patterns in emerging markets recently. some of it has to do with respond-risk of behavior in some of it probably does have to do with monetary policy and advanced economies which includes the united states. we do pay attention to that. i -- i frequently meet with colleagues in the emerging markets at the june 20, for
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example and discuss these issues i think the right way to think about it is that as the g-7 and the g20 both have noted, what u.s. monetary policy, like that of japan, is trying to do is help this economy grow. and a global recovery, global -- strong global growth depends very much on the u.s. growing at a reasonable rate. and so while there is some effect, i think the net effect, including a stronger u.s. economy is on the whole positive, and that the most of my colleagues in the emerging markets recognize that. that being said, anything that we can do through communication or other means to try to minimize any overflow effects or side effects, we will certainly do. >> mark will come in for the last question. >> well, mr. chairman, marked
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hammercloth bank rate that can't be talked about being in uncharted territory with policy. we can remember that these news conferences began about two years ago as well. so there is that makes of communication and policy. insofar as the fomc decided not to include the information about adjusting the asset purchases today, how do you walk that fine line and why did the fomc decided to essentially leave it to you to describe that as opposed to putting it down in its own words? thank you. >> again, we don't think of this as a change in policy. what i was deputized to do, if you will, was to try to make somewhat cleared the implications of our existing policy and to try to explain better how the policy would evolve in various economic scenarios. and that's a little bit difficult to put into, you know, a very terse fomc statement.
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that being said, going forward, i think that, you know, some of these elements, to the extent that we can make them useful will begin to appear in the fomc statements. entirely possible. but it seems like the right tactic in this case to explain these fairly subtle contingencies in a context for i could answer questions and respond to any misunderstandings that might occur. >> thank you. >> thank you. tracy: we have been listening to fed chairman ben bernanke giving his press conference. want to point your attention -- and you have been looking at the numbers on your screen, i doubt that has sold off. it began to release sell-off the moment you begin to take questions from reporters there the federal reserve. hello, everyone. i'm cheryl and for liz. this is the last hour of trading. our fed chairman just finished speaking. as we just heard, the fed thinks
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the economic outlook is improving. the risks are decreasing. these are encouraging words about the economy. investors are really are taking a llt of profit off the table as they get ready for the fed to ease its bond buying program. as you heard him say, likely going to be toward the end of this year as he watches all the data. here are the major indices. the dow down 109. sixty-three do want to point out, we were down more than 170 points off as he began to speak. we have pulled back just a little bit. nasdaq substantially down, more than 1%. the s&p as well. the russell 2000. a broad base sell-off. whaa you call this volatility, selling the river, by the newsletter on. that is our market participants an hour rock stars. we have a complete rock star ensemble for you right now. let's get right to them off. we have the managing director and u.s. interest-rate strategy had here with me in studio. stuart freeman, wells fargo adviser chief equity strategist
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running from san louis. always good to have you. for dallas fed vice chairman and current cato institute's senior fellow. you will get to our gentleman in just a moment. first, let's get to our floor show. we have trader standing by the nyse-listed cme, and of course, the nymex. plus, is nicole petallides on the floor of the new york stock exchange. nicole, to you. you are watching the numbers as the press conference went on. your initial thoughts? >> my initial thought here is that for the near term, what they expected, they considered the news in the short term. we saw some people actually taking profits off the table. what's also interesting is that you did see a broad base sell-off. some of the sectors that sell-off, defense. very, very highly correlated to interest rates by telecom, like utilities. and we see it they obviously may taper off those asset purchases later in the year. in the meantime, we get the fed. we are here if you need is. we have the tools if you need them.
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it will use them when you need them, all we won't. it is typical of to be basically saying we're here. one concern is inflation. inflation, they don't want it to be too low, but for right now it seems to be on track. certainly does not seem too hot on fiscal policy. made that no more than once today. cheryl: the did mention that. that is a good point. fiscal policy, there's not enough economic growth up there right now. he did when this policy. that's perfect. stay with me. a month to bring in keys. obviously you were watching the accident. when i say to sell on the rumor, it is because we did not hear that many things that were all that surprising to us. get you saw, as nicole just mentioned, of the defensive sectors begin to sell-off because there were stable. health care. what do you make of the choice of selling that we have seen in the last hour? >> well, as nicole was just saying, it is strictly names in sectors that are sensitive to the interest rates. we saw the reit get smashed pretty hard. some of the financials and the banks sold off and the utilities
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had it pretty hard. the chairman even said, they are a little perplexed and puzzled as why the rates have started to move up. have been doing everything to keep the yield curve down across the entire term structure. once he started speaking and was talking about having some moderately good news in side of the economy, at least improving news, as he said, that is when you saw the 10-year yields start to spike in the interest-rate sensitive names get it and hit hard. cheryl: and you did mention the 10-year which was one of the big stories that we have seen play out. i want to get direct the cme because also another thing that we have seen is the dollar getting stronger and stronger. the fed chairman began test speaking over the last hour. what do you make of what we're seeing of the dollar and its effect on the commodity pits? >> it was a reaction to what is going on in the treasury market completely. just looking at that. they came out earlier and said, under 2% in 10 years by the end of the year. here is the market.
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moving forward. so i think you have the yen in gang effect. only days like today is not just what america does. right now in asia it is midnight for all purposes. they will wake up anddhave their take. so for the dollar i think it is going to be just sideways right now. especially through the weekend, that is when i look for the market to pick up their own momentum and set a trend until the next fomc deal. cheryl: okay. we want to get you in here quickly before we take a break. he talked about commodities, he talked about the weakness in china and the effect on the commodities market, in particular the oil market. >> yes. i mean, qe1, qe2, you saw a weaker dollar. you some money being pumped into the system, and you saw stronger gold prices, commodity prices. now you are seeing the fact we are seeing a stronger economy and some tapering off. you are seeing the exact unwinding of it. you are seeing global economies a little bit weaker, a stronger dollar, lower commodity prices. cheryl: there you go. thank you for.
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of course nicole. we have continuous coverage. it will come back with our other all-star panel and talk more about the economic outlook, of course, from the fed, the statement and those dissenters. we will be right back. ♪ vo: traveling you definitely end up meeting a lot more people but
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to the joint economic committee of congress in which he really seemed to embrace for the first time backing away from quantitative easing from slowing down all these big bond purchases. i was surprised at the level of detail that he came to the press conference with saying, listen, you know, if we see the unemployment rate headed down to 7%, a specific guidepost, specific benchmark, you know, we are going to start tapering down and we're going to wind this thing up by next year. the other specific thing he said, we're not going to be selling the trillion dollars or so of mortgage-backed securities on the fed balance sheet. those of the bonds they have been buying to help push mortgage rates down. there have been concerns that if they started to sell those, that that would flood the market will supply, prices would decline, and mortgage rates would go back up. the concern about making sure that these low mortgage rates,
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maybe not a historical low ones, but could low mortgage rates continue. so the housing markee recovery continued. cheryl: and let you pick up on that because we will be getting a new breed on mortgage rates tomorrow and the treasury markets right now. we will be a big change for mortgage rates. i think your point to that was excellent. peter barnes, thank you very much. appreciate your coverage. of course asking the future fed chairman his plans and he did not want to answer that question. spring in our power right now. a lot of questions. george with me again. stuart freeman with me from wells fargo and our good friend. want to start with you and pick up on something that i asked peter. that was about the demeanor of the fed chairman. you notice something and how he spoke to the press that you have not seen before. >> well, it felt much more hawkish. in other words, optimistic. much more guarded and more inclined to enter on the side of wanting more easing.
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fell like there was a transition starting to form. could be a function that maybe he is preparing to leave the post, it was not answered and i think it is a good point. could be the need to set the stage for eventually tapering down things. cheryl: you were saying that the way that his voice was quivering a little bit here and there, we have heard that from him before, but maybe he knows he has are really -- to strike a balance between tapering in getting the market's torrid. economic hawkish guys out there that he is going to start to pull back to send. >> the thing is i heard that heat is trying to be super careful. he spent an hour trying to explain himself. really felt like it was a small step. the investors took it as a big step for the markets. this is a statement. back in may the fed may comment that the committee continues to see downside risk to the economic outlook.
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today's statement in a committee, the downside outlook. having diminished since the fall you put any weight in that change? >> yes. i think it is important. think they are signaling a change in both their attitudes and possible down the road where they're going with policy. the also clarified that he is not going to sell the mortgage tax, which is important. cheryl: that was commander certainly did hear that. less talk about what we are seeing in the equity market. again, quite a sell-off on our hand in the last hour. came back just a little bit, but your initial thoughts on what you saw with the dow, nasdaq, and is in peak. >> you know, the equimark it's, what i saw is what you might expect. basically, they are little more optimistic cautiously. and i did not hear him say that the risk is to the downside more than the upside this time. so clearly the statement was more favorable on how the economy works. a little more direct develop the plan might be, the trajectory.
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and that think the markets responded, as it did because you saw interest-rate come down. defensive stocks came off a little bit more than others. and the stocks are benefiting from the economy getting better and maybe eventually international economy getting better, the ones that did better during this timeframe. cheryl: i guess i stand corrected. we did sell on the news. want to ask you about that gdp production and whether you make any thing out of this. 2013, initially -- in march it was 23 to 28. today they came out and said to. cheryl: >> the economy is going through this fiscal drive. you mentioned there is fiscal worries. i think that you have to take that into account. more interesting is in the future years on how it will rebound. it implies that the fiscal drag will fall back. cheryl: and over to you about
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the differences here in the fed and what could be a change in. he was twice asked what his plans or and refused to answer the question. but at the same time, everyone seems to think the majority of those out there say janet will be the next federal reserve chairman. but that change is still unclear. what do you think happens? what is your prediction? >> my prediction would be janet, but i would caution that there is an old song, whether it is just a board member or the chairman, you don't want to be a front runner, and you never wan@ to appear to be running for the job. so it probably will be hurt, but they're is a danger if they're is a perception that she is running for the job. >> we also had to dissenters today, not one, but to. different reasons for them not voting with the committee, but still a change nonetheless with them internally at the fed. i want to thank all of you. wells fargo.
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quite used to come around with me? we will take a quick commercial break. a lot more to discuss. and also, market activity and where to put our money. closing bell in 15 minutes from now. ♪ friday night, buddy.
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♪ cheryl: all right. the fear indexes moving lower after hearing from fed chief in bernanke. nicole petallides on the floor of the new york stock exchange watching that. >> reporter: i am taking a look and a lot of things. when i am over, he's doing a lot technical analysis looking at
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the uptrend since november which still really is intact. while chappie says basically make 22nd when we heard from ben bernanke about the possibility of tapering as asset purchases, but we still have a lot of volatility. still choppy, but still holding the uptrend. also, want to take a look over here, he was selling the futures. the s&p futures down dipping to the lows of the day, so we are seeing now as we go into the closing bell, ten minutes left and we are and those of the day. the other thing worth noting is all this red on the screen, right across the board, technology, financials of selling off, and it is worth noting that the interest rates sensitive type sectors such as utility and telecom have been the worst of the bunch. as you go into the closing bell here we are down about 180 points with selling across the board. cheryl: pushing session lows. thank you. we will see you in ten minutes. want to bring back in our fed panel as we head back toward the closing bell. with me.
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stuart freeman from wells fargo joining me. drizzle, a former dallas fed vice president for. and also want to add at this point, william del. and let's go to you first. i want to pick up on what nicole was just talking about, this last-minute selling action that we are seeing from and equi perspective. what do you make of it? >> i think what you're seeing is the weak sectors of those sectors where you had weak orders. buying late in the rally. yet a first was to leave. d.c. utilities are down, telecom is down. that is what you would expect. as a people that don't want to be inequity anyway, so they're heading to the exit 56 what you make of the fact that those are groups that are dividend payers, that have been really the backbone of many portfolios? do you see this as a one-off type of situation to the afternoon, or is this more of a total shift we are going to see for the weeks to come? >> i think it is a rotation that we're seeing in we have seen it plans overtime. we started to see technology and industrial starts to improve. the same time you're seeing utilities and telecom another
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defensive sectors with buying kind of got exhausted and you add we call is that being forced out. those areas are starting to give up relative strength. cheryl: i want to bring you back in and talk about, again, we saw today with this news conference and ben bernanke, of the questions focusing on mortgage-backed securities, the fact that it will not only be holding a trillion dollars in bonds and the balance sheet not moving, but again, he was very specific in saying that even though housing is recovering they're still going to maintain status ." what do you make of that? is this something that the fed chief is seeing that he did not share today with the rest of us? >> they have been very clear that they need to maintain the portfolio elevators for a long time, even after they had their objectives because they know if there were to ever sell to the market and the market is i really prepared for rates moving much faster and axle is slowing down the house a recovery. the selling an existing engine was not what was the focus today. they get the markets' prepared. they're still easing.
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>> there are still easing. again, i kind of mention this as we are going to commercial break and a but there are a lot of names that are being flooded about as possible replacement -- replacements. and the reporters are very interested in that. do you think it's the end of the day that we need to focus of much on a changg in leaders or the short-term picture for the fed more important right now? >> well, i would not focus on the change because i am fairly confident that president obama will pick somebody that he is sure will continue the policies as they have been outlined by bernanke. he has kind of tied-hands for the rest of the year. a little bit for the next person, along, but i would not focus on that. it's fine, but i think we ought to see how this plays out for the rest of the year. cheryl: you know us, we are nosy journalists. want to try to wrap things up but you. the fed chairman mentioned it again and aggin during that press conference.
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i have to mandates. employment and monetary policy. is he doing effective job on both in your perspective right now? >> i think he's in a good place here. they have been doing the right thing. we don't have the inflation. a lot of people were concerned about the liquidity they have been putting into the marketplace. and, you know, the unemployment numbers had been coming doon slowly. you know, even though they sound more confident that is going to occur and continued consistently , to move to the downside. so i think they have done a really nice job, and i think that we should be looking at cyclical stocks. cheryl: thank you so much. i have breaking news in the middle of all of this. i have to thank all of you. we are getting breaking news right now from the british govvrnment, and i want to bring this to your attention. the british government is considering breaking up royal bank of scotland. the country's treasury chief said today likely we will hear more of this mounting
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frustration with the inability dustup of five-year banking crisis down $0.27. this is our bs. wanted to bring this breaking news to your attention as we get to the clothes. a very active market date. don't move. we will be right back. ♪ you make a great team.
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[ ghosts moaning ] surprise -- your car needs a new transmission. [ coyote howls ] how about no more surprises? now you can get all the online trading tools you need without any surprise fees. ♪ it not rocket scnce. it's just common sense. from td ameritrade. >> as we are just a minute 1/2 from the close, one of the most active afternoons during a ben bernanke press conference we have had in months. a very busy day as we watch the selloff continue. i want to bring in david asman. david: hey there. >> my colleague has been -- david: has something happened? i kind of missed the news of the we want to start with big news. we're close to a 200 point
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decline here. let's go to nicole petallides from the new york stock exchange. the one figure everybody is looking at is 10-year. we've seen the yield jump. it is over 7%. the 10-year is trading at 2.35, 34, more or less. that is over 6% that is a huge jump. >> when i'm looking at the 10-year right now i see it pulled back as far as yield. we were getting policymakers decisions there and we saw it moving to 2.8% almost. when you talk about that, that is 14-month highs. that's a big deal. david: forgive me for interrupting, nicole. we're looking a the intraday yield jump. that is a very big market and set the 10:00 for the market you. >> saw the yield jumping to 14-month highs. gold moving to the lowest since may 20 third. dollar highest against the euro and yen in roughly a week. stocks selling off.
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you had at love action. [closing bell rings] >> bells are ringing on wall street. talk about a selloff in the afternoon. when ben bernanke talks, the market, get like a tepid kind of momentum. today was certainly not that day. david: we warned that we may go over a 100 point loss. looks like the way it is settling. it is settling on the downside. essentially what ben bernanke said, hey, risks have diminished. the economy is getting better and tapering off will continue. he gave as you very specific timeline for tapering off of the bond purchases. all that weighed in on the market. the question is whether this is it or there are worst times to come in terms of a selloff t was a selloff and it was instigated by the federal reserve. cheryl: dow is down 205 points. we

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FOX Business June 19, 2013 3:00pm-4:01pm EDT

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